Yellow jackets: where will the government find the money to finance the announced measures? - BFMTV.COM

The bill is getting heavier for public finances. To try to calm the rage of the yellow jackets, Édouard Philippe later announced two series of measurements. The first, which included the surcharge for conversion and the increase in the mileage allowance, is estimated at 500 million euros. The second, ie the elimination of fuel taxes for the whole of 2019, represents a deficit of almost 4 billion euros for the state, not to mention the promise to stabilize gas prices and of electricity whose cost has not yet been calculated.

Problem, the government has already built a very limited budget for 2019, with a deficit forecast of 2.8%. "The differential to reach 3% is 4.9 billion euros", according to calculations by Christopher Dembik, chief economist of Saxo Bank, who published a note on the topic this week. The government is already close to the limit if it wants to respect its European commitments and yet it is not enough in the eyes of the yellow jackets that have maintained their mobilization this weekend.

The government wants to stay on the budget

So we will have to find something to finance these measures, but where? The executive could exceptionally choose to let the deficit slip. Paris does not already respect the rules of the letter and therefore 2019 is an exceptional year, with the CICE blocking the charges without which the deficit would be 1.9%. Brussels could be conciliatory, but it would be to break the European ambitions of Emmanuel Macron, who made good public accounts "THE" condition for "restoring the credibility" of France.

The government has ruled out this possibility anyway. "The budget coverage will be maintained, the savings corresponding to the announced measures will be detailed soon", said the office of the Minister of Public Accounts, Gérald Darmanin, the newspaper The world.

Voted at first reading in the Assembly, the 2019 budget is currently in the hands of the senators and will be passed among those of the deputies in mid-December. This is the moment when these new measures will have to be voted.

GAFA tax, reduced VAT and CICE

One of the options recently put on the table is the taxation of digital giants, the GAFA (for Google, Amazon, Facebook and Apple). Paris and Berlin have proposed to their European counterparts to tax at 3% the revenues that these companies derive from online advertising. They left until the spring of 2019 to the 27 member states to be agreed. In any case, France will implement the promise of Bruno Le Maire on Thursday on France 2. But it should not pay much, since a return of 1.3 billion euros is expected. at the level of the European Union.

Another solution would be to review reduced VAT rates for catering, suggests Christopher Dembik. The government had decided to finance the measures of the covenant law, before rejecting it. These tax benefits, which should encourage employers in the sector to hire, have not had the expected effects and represent a state deficit of 3.6 billion euros in the year, according to chief economist Saxo Bank. The parliamentarians had begun to study the question. The file could then return to the table. On the other hand, the risk is that an increase in VAT is transferred to prices and therefore slows consumption.

Finally, companies could be involved. In any case, this is one of the favorite tracks of the executive, second Echoes. Initially scheduled for January 1, the CICE rocker mentioned above could, for example, be postponed for a few months. So how it is, this transition must cost more than 20 billion euros to public finances. The government could also review the income tax reduction program, which is expected to increase from 33% to 31% in 2019.

Slowed economy

Even if the government manages to close its budget by finding money for these new measures granted to yellow jackets, it will certainly have to change it during the year, due to slower and faster economic activity than expected.

The government expects a growth of 1.7% for 2018, but this perspective is considered too optimistic by several institutions, including INSEE. "After the review, it will probably be around 1.5%," said general manager Jean-Luc Tavernier on Franceinfo this week. However, when we finish the year with less than expected growth, it is even more difficult to reach the goal of the next year. The government has rebuilt its 2019 budget with a growth forecast of 1.7%. "Everyone agrees that it is completely unrealistic and we will be around 1.4%," says Christopher Dembik. And this says less growth, says less tax revenue for the state. With 0.3 points less growth than expected, the deficit would have increased by 0.15 points.

Things could get worse if the movement of the yellow jackets continues to go on, warned Jean-Luc Tavernier. The longer it will take the government to resolve the conflict, the more complicated it will become the tax equation. Finally, according to the analysis by Christopher Dembik, the executive has stalled:

"To get out of the crisis, the easiest solution to implement politically is to restore ISF," he said. "Without ideology, the economic impact of its removal is questionable and impossible to observe." However, "it is undeniable that if they restore ISF, it will be much commented and will be a very negative signal, especially towards foreign investors, like Americans who tend to see France as a socialist country, symbolizing the premature end. of the Presidency of Macron ".